Performance Related Pay Coverage in the UK
AbstractA simple model of the firms’ decision to pay workers performance related pay (PRP) is tested using company level data for 1,001 UK private sector businesses. From the basic sample statistics we observe that, on average, 26.5% of workers are covered by PRP systems. Yet this hides the fact that only 50.5% of businesses have any workers at all covered by PRP. Our empirical analysis offers support for the key hypotheses drawn from Lazear type PRP models, which emphasise the relations between firm size and implementation costs, and ease of measurement, as medium and large firms are more likely to have PRP systems. However, these results are over-turned when we consider the extent of workers covered by firm level PRP systems if they are in place. Here we observe that more workers are covered by PRP in micro and small firms.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 1619.
Date of creation: 30 Jan 2007
Date of revision:
performance related pay systems; firm size; quality of work;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-10 (All new papers)
- NEP-BEC-2007-02-10 (Business Economics)
- NEP-EEC-2007-02-10 (European Economics)
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